Hong Kong central bank raises interest rate after Fed hike, HSBC follows

Hong Kong central bank raises interest rate after Fed hike, HSBC follows
FILE PHOTO: An attendant walks outside the entrance to Hong Kong Monetary Authority in Hong Kong, China November 10, 2015. Picture taken November 10, 2015. REUTERS/Bobby Yip/File Photo

HONG KONG: The Hong Kong Monetary Authority (HKMA) on Thursday (Sep 22) raised its base rate charged through the overnight discount window by 75 basis points to 3.5%, hours after the US Federal Reserve delivered a rate hike of the same margin.

HSBC said it would raise its best lending rate in Hong Kong by 12.5 bps to 5.125 per cent from 5.0 per cent effective Sept. 23, its first rate hike since September 2018.

“Anticipation around a potential prime rate increase in Hong Kong has been ripe and today’s announcement marks the beginning of an upward cycle,” Luanne Lim, HSBC’s chief executive for Hong Kong, said in a statement.

Hong Kong’s monetary policy moves in lock-step with the United States’ as the city’s currency is pegged to the greenback in a tight range of 7.75 to 7.85 per dollar.

The Fed delivered its third straight rate increase of 75 basis points on Wednesday and signalled borrowing costs would keep rising, underscoring the US central bank’s resolve not to let up in its battle to contain inflation.

The HKMA’s move took its base rate to the highest since October 2008. But Hong Kong’s finance chief said on Thursday he does not see a major risk to the city’s real estate market nor a need to adjust property control measures.

Source: CNA/rj